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Luxembourg's financial regulator, the Commission de Surveillance du Secteur Financier (CSSF), has published a statement on Islamic debt securities that stresses Luxembourg's desire to provide further clarity on certain rules applicable to sukuk (ie, Islamic bonds). The CSSF states that "issuers of sukuk have recognised the attractiveness of the Luxembourg legal framework for Islamic finance", and further confirms that sukuk can qualify as asset-backed securities (based on the provisions of Article 2(5) of the EU Prospectus Regulation (809/2004/EC) or, under certain conditions, as guaranteed debt securities (based on the provisions of Article 23(2) and Annex VI of the regulation).

This development strengthens legal certainty for sukuk issuance. It further boosts Luxembourg's status as a global hub for Islamic finance and its commitment to continuous growth of Islamic finance in Luxembourg. The CSSF's statement follows two circulars issued by the tax authorities in 2010, which provided guidelines on:

● certain aspects of direct taxes applicable to murabaha and sukuk; and

● certain aspects of the indirect tax treatment of murabaha and ijara.

The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.